Mapping out SEA’s digital defenders (update)

Over the past decade, Southeast Asia has seen a surge in both the volume and complexity of cyberthreats, according to a report by the International Institute for Strategic Studies.

As a result, companies have increased their investments in security measures, and younger startups are adopting security solutions. The transition to cloud computing, remote work arrangements, and developers taking on security responsibilities has expanded the opportunities available for startups in this sector.

While Southeast Asia’s digital economy is expected to hit a gross merchandise value of US$1 trillion by 2030, it presents opportunities for perpetrators of cybercrime. Unfortunately, cybersecurity, particularly readiness against cyberthreats, remains relatively low in the region.

Slowing investments

In this year’s second quarter, funding for cybersecurity startups plummeted to just over US$1.6 billion, marking a 63% decline compared to the same quarter last year, according to data from Crunchbase.

In contrast to the more lenient 2021, the funding landscape has recently shifted due to the downturn in the global economy resulting in investors prioritizing companies that can achieve positive cash flow quickly and efficiently.

Sharp spikes in investment deals and amounts were seen in 2019 and 2021 due to funding rounds by Acronis, a Singapore-based data protection and file recovery firm, at US$147 million and US$250 million, respectively.

However, there have been significant dips in investments in both 2022 and 2023, dragged lower by tighter valuations and the impact of the funding winter.

Like others in the tech startup ecosystem, early-stage cybersecurity firms received the most funding. As the chart below shows, pre-series rounds dominate the investments.

Recently, startups including SquareX, Right-Hand Security, Peris.ai, and Blackpanda raised over US$26 million in early-stage rounds.

Ransomware still the leading cyberthreat

Digitalization opens doors